FHA Loans in Alabama: One Limit in All 67 Counties, and Two Recording Taxes

You could start in Huntsville, drive south until you reach the Gulf at Baldwin County, and the FHA loan limit on a one-unit home would not change once along the way. It is $541,287 in Madison County when you leave and $541,287 in Baldwin County when you arrive.

All 67 Alabama counties share the same 2026 FHA loan limit, $541,287 for a one-unit home, so the county you buy in does not change how large an FHA loan can be.

I'm Jeff Moran, NMLS #483943, licensed to originate mortgages in Alabama through C2 Financial Corporation. This page is about what an FHA loan looks like in Alabama. The national explainer on FHA loans covers how the program itself works.

FHA loan limits in Alabama for 2026

HUD publishes the limits once a year, and its Mortgagee Letter 2025-23, dated December 11, 2025, sets the 2026 figures for any FHA case number assigned on or after January 1, 2026. Every Alabama county came in at the national floor, which is the lowest limit HUD sets anywhere in the country:

Home type	FHA limit in every Alabama county
One unit	$541,287
Two units	$693,050
Three units	$837,700
Four units	$1,041,125

No Alabama county is above the floor, which is different from Georgia next door, where 34 counties are, most of them around Atlanta. Fannie Mae and Freddie Mac have their own limit, the conforming baseline, and the Federal Housing Finance Agency's 2026 announcement set it at $832,750 in all 67 Alabama counties. If your loan needs to be bigger than the FHA limit but under that figure, it is a conventional file instead of an FHA one.

The limit caps the loan, and the home can cost more than that if you put more down. HUD's FHA handbook sets the maximum loan at the lesser of the county limit or a percentage of the adjusted value, which is the lower of the purchase price and the appraised value. The upfront mortgage insurance premium can be financed into the loan on top of that without counting against the limit.

FHA down payment, credit and mortgage insurance in Alabama

Your own money in the purchase has to be at least 3.5 percent of the adjusted value, and with a credit score of 580 or higher you can borrow up to 96.5 percent of that value. Mortgage insurance comes in two parts, one paid upfront and one added to your monthly payment. None of that is different in Alabama, and the explainer linked above goes through what the insurance costs and when a conventional loan comes out ahead.

Alabama's two recording taxes on an FHA purchase

Alabama taxes two different documents when a home changes hands: the deed that transfers the home to you, and the mortgage that secures your loan. Both are paid when the documents are recorded at the county probate office, on top of the ordinary county recording fees.

With 3.5 percent down, the money you put in is not the only cash due at the closing table. I want you to see both taxes on your estimate before you write an offer, rather than meet them on the closing statement.

There is a way to ask for help with those costs. HUD's handbook allows the seller, the builder or anyone else with a stake in the sale to pay up to 6 percent of the sales price toward your closing costs, prepaid items and discount points. The Department of Revenue says which documents are taxed and does not say whether you or the seller pays, so your purchase contract settles that, and the offer is the place to put it.

FHA refinances in Alabama and the mortgage tax

The mortgage tax reaches a refinance too, because the new mortgage gets recorded. That includes an FHA streamline refinance, which is open to you only if you already have an FHA-insured mortgage and which skips the appraisal. Skipping the appraisal does not skip the tax, so the tax belongs in your math when you work out whether a refinance pays for itself. The Alabama refinance page has the full picture.

Closing, title and flood on the Gulf Coast

Alabama law does not make every residential closing an attorney closing. Title and abstract companies may conduct their own title business, while drafting the deed and mortgage and giving legal advice stay with a lawyer. Where each state draws that line is the cross-state view. There is also no statewide custom on who pays for the owner's title policy, so that one is a contract term too, and who pays for title insurance in each state shows how the rest of the country handles it.

A coastal home in Baldwin County, including Daphne, Fairhope and Foley, can be in a FEMA Special Flood Hazard Area. FHA will insure a loan on a home in one of those zones only if the community participates in the National Flood Insurance Program, and your lender orders its own flood zone check.

Pricing an FHA loan for your Alabama purchase

You can see FHA priced next to conventional for your scenario whenever you'd like, with Alabama closing costs that include both recording taxes. Pre-approval comes after that, when you want a letter behind an offer, and Which mortgage fits you compares FHA with the other programs side by side.

Nothing here is a loan approval, a denial, or a commitment to lend. FHA limits are published once a year and HUD revises its handbook, so what applies to your file is confirmed at application.

Common questions

What is the FHA loan limit in Alabama?

HUD set the 2026 limit at the national floor in every Alabama county, so a one-unit home has the same limit from Madison County to Baldwin County, and two-, three- and four-unit homes have their own statewide figures. It covers FHA case numbers assigned on or after January 1, 2026.

Does the FHA limit change by county in Alabama?

No, it does not. Birmingham, Huntsville, Mobile, Montgomery and the Gulf Coast all share one limit. Some other states have higher-priced counties with a higher limit, and Alabama has none of those.

Does an FHA loan in Alabama require a 3.5 percent down payment?

Yes. You put in at least 3.5 percent of the adjusted value, which is the lower of the purchase price and the appraised value, and that is the same in Alabama as anywhere. Alabama's recording taxes and other closing costs are separate from it.

Do I pay Alabama's mortgage tax on an FHA loan?

Alabama taxes mortgages recorded in the state, and an FHA mortgage is recorded like any other. Your purchase contract decides whether you or the seller pays it, and FHA allows the seller to contribute toward your closing costs up to the handbook's limit.

Can I do an FHA streamline refinance in Alabama?

Yes, if you already have an FHA-insured mortgage. A streamline refinance skips the appraisal, and Alabama's mortgage recordation tax still applies to the new mortgage, so its cost belongs in the comparison.

Can I buy a home on the Gulf Coast with an FHA loan?

Yes, if the home meets FHA's flood rules. A home in a Special Flood Hazard Area is eligible only when its community participates in the National Flood Insurance Program, and the lender orders a separate flood zone determination.